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(News Focus) Labor guidelines likely to trigger lawsuits, disputes

All News 20:34 January 22, 2016

SEOUL, Jan. 22 (Yonhap) -- The government's move to implement contentious labor guidelines next week is likely to trigger a series of lawsuits, a scenario that could further complicate efforts to reform the country's rigid labor market.

Under the guidelines, companies can fire "noticeably" underperforming workers, beginning Monday.

Companies will be also able to amend their employment rules, such as those for recruitment and dismissal, without consent from workers, according to the new guidelines.

Currently, companies can terminate an employee's contract only when they are either involved in corruption or an embezzlement case, or when they have to lay off workers due to serious financial difficulties. Management must also first get consent from labor unions to change the rules in a way unfavorable to employees.

Labor Minister Lee Ki-kweon said reforming the labor sector is something that is desperately needed as South Korea extended the retirement age to 60 starting this year.

The announcement of the guidelines represents South Korea's commitment to boosting the flexibility of the labor market.

Still, the move could prompt labor unions to take the issue to court or seek a court injunction over the legally non-binding guidelines of the Ministry of Labor and Employment.

The Federation of Korean Trade Unions declared the guidelines null and void, claiming that the government's move is like "issuing a license" for employers to fire workers.

The major umbrella labor union vowed to stage a rally next week to try to thwart the guidelines.

Earlier this week, the union declared the breakdown of a landmark labor deal as it quit a trilateral meeting with management and the government in protest of the labor guidelines.

In September, labor, management and the government produced a deal -- the first in 17 years -- to ease labor restrictions. The deal would allow companies to dismiss workers who are either negligent or underperforming.

The FKTU accused the government of drawing up the guidelines unilaterally, noting the sides agreed in September to have full discussions before releasing any reform measures.

The guidelines drew mixed reactions in the financial sector.

The Korean Financial Industry Union threatened to launch a "strong struggle" against the government unless the government withdraws the guidelines.

But management in the financial sector hailed the guidelines, saying they could help enhance competitiveness by ushering in a flexible labor market based on performance.

The management said the guidelines could boost ongoing efforts to introduce a performance-based salary system.

Earlier this week, the government said it would adopt a performance-based salary system for public officials on a wider scale.

In South Korea, promotions and salary have long been based on seniority, not merit. But merit has emerged as a key factor in recent years.

The Korea Employers Federation, which represents the interests of South Korean companies, called for an end of disputes over the guidelines.

Still, the disputes are likely to deepen in the coming months.

"We will launch an anti-government struggle" over the government's policy of making it easier for companies to fire workers," the FKTU said in a statement posted on its website.

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